US Counters China on Global Shipbuilding Dominance

The global shipping and maritime industry has witnessed a high demand for new ships, shipbuilding, to cut greenhouse gas emissions and the ultimate 2050 target for net-zero.

The shipbuilding industry plays a crucial role in designing, constructing, and retrofitting vessels that can operate on alternative fuels, advanced propulsion systems, and energy-efficient technologies.  China is already in the lead with its shipbuilders taking the lion’s share of new merchant vessel orders. This is followed by South Korea and Japan.

Dimitris Roumeliotis, an analyst at Xclusiv Shipbrokers, said in a report that China’s shipyards’ orderbooks have already reached record-high levels. This reflects sustained competitiveness despite growing geopolitical noise and the trade war with the US.

He highlighted that the US is not far behind. “With the US Trade Representative (USTR) proposals and the US SHIPS Act expected to come into force later this year, designed to reduce China’s shipbuilding dominance and to finance a resurgence in American merchant shipbuilding, there are some signs that investment in China-built newbuildings has slowed.”

Roumeliotis said the second half of 2025 is expected to see continued moderation in contracting volume, particularly outside of container shipping. He believes that while yard capacity and delivery schedules are healthy, fresh investment decisions may remain delayed until there is greater clarity on USTR developments, macroeconomic stability, and earnings sustainability. 

The analyst highlighted a mix of factors are weighing on sentiment – increased macro uncertainty, softer earnings in some sectors and the recently proposed USTR port fees on China-linked ships. It should be noted that USTR has already caused considerable concern to shipowners and charterers, and this could affect orders at Chinese yards.

The Donald Trump administration, through the USTR, has taken targeted action to restore American shipbuilding. It is also addressing China’s unreasonable acts, policies, and practices to dominate the maritime, logistics, and shipbuilding sectors.

China Dominates Global Shipbuilding Industry

US Congress, in a letter to USTR Ambassador Jamieson Greer in March 2025, stated that China’s discriminatory practices have forced US shipbuilders, their supplies, and workers to compete on an uneven playing field and have contributed to the decline of the US shipbuilding industry. It said China’s investment of billions of dollars into its shipbuilding industry forced US shipyards to close their doors or compete for the few remaining contracts.

“The US Navy estimates China’s shipbuilding capacity at roughly 232 times that of the United States, with US businesses shipping products on vessels made in China, financed by state-owned Chinese institutions, owned by Chinese shipping companies, and reliant on a global maritime and logistics infrastructure increasingly dominated by China,” it said in the letter.

The Congress stated that this poses risks for the US national security and supply chains. “Our dependence on Chinese ships and shippers imposes unacceptable costs and risks in terms of critical domestic manufacturing capacity and job losses.

The American Iron and Steel Institute also voiced its concerns, saying China’s aggressive subsidization and state-directed control over its shipbuilding sector have distorted global markets for decades. “This has come at the direct expense of American manufacturers and shipbuilders, undermining our domestic capabilities and eroding jobs in industries vital to the US economy and national security.”

US Takes Action

In April 2025, Ambassador Greer said ships and shipping are vital to American economic security and the free flow of commerce. “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the US supply chain, and send a demand signal for US-built ships.”

The USTR highlighted balanced actions in two phases. It will implement fees on vessel owners and operators of China based on net tonnage per US voyage, increasing incrementally over the years; fees on operators of Chinese-built ships based on net tonnage or containers; incentivizing US-built car carrier vessels, fees on foreign-built car carrier vessels based on their capacity. The USTR also plans to incentivize US-built liquified natural gas (LNG) vessels, limited restrictions on transporting LNG via foreign vessels.

This story originally appeared on SeaNews.